I don't see what the point would be of Microsoft putting in a big drive now. What do you think is more important to them, bringing down the price of the 360 to compete with PS3 or putting in a bigger hard drive? They can put in a 60 gig drive without significantly raising the costs and still have a price drop.

The 360 doesn't need as big of a hard drive as the PS3 because the game installs are not very big in comparison. When you have games that take 5 gigs to install you need a decent size hard drive.

But thats just it.  With economies of scale the price difference between a 20gb and 60gb HDD is almost negligible.  There is still a reasonable difference with models like 250gb and to a lessor extent 160gb that haven't been as widely produced, but even 120gb are only marginally more expensive at manufacturing levels.  The main retail difference comes from markups.  

So what you are saying doesn't make sense.  The actual physical cost of the drives is almost the same, the only cost that would exist is changing over production lines.  But Microsoft wouldn't pay this cost themselves, because they would simply make their third-party producer absorb it by threatening to switch suppliers.  If the TP refused, they really would switch suppliers.

At the end of the day, whichever scenario you really were talking about, the price of making that model of Xbox 360 is almost exactly the same before AND after the HDD upgrade. 

Thats not true at all.  Their are dozens of HDD manufacturers.  If one refuses to bare the costs of the changeover, MS would just buy from another one instead.  Or do you think there is some sort of third party HDD manufacturing utopia where they all work together and arn't in it for money?

That was not a very reasonable comment for you to make:( 

That's exactly what I've been trying to get you all to see, and that is why I say a jump from 20GB to 60GB is most likely.

The actual physical cost of materials doesn't change, but to pay for the switch over production lines does, and if you think Microsoft can force them to do it for free.... Oh man. The supplier they want to switch to would have to do the same exact thing.

At the end of the day, and jump from 20GB  to 120GB and 120GB to 250GB would lose Microsoft too much money.

So like I said, 20GB to 60GB makes the most sense, and the Elite won't have any change. You and gebx just tried to change my words all up into a crazy knot.

It's not just switching to a new line (more likely updating the current line since no one else uses 20GB harddrives), it actually costs more to make a bigger harddrive.

I suppose I should have used 20GB vs. 120GB so you'd see the difference.

Wow, I think some of you guys are forgetting that some PS3 games install as much as 5 gigs onto the system's HDD and 360 installs nothing. If you play a lot of games, you're going to need that HDD space. And, besides, Sony will no doubt get their digital delivery togather sooner or later.

Thats true. The 360 doesn't involve any installs yet. However it could in the future if Microsoft allows devs to make HDD compulsory.

I wonder what would you put inside a 500gb. I got a 320gb external HD and I don't seem to have anymore hunger for space. I filled about 250 or so.... Well everything's there. My whole music, movies etc.

Well if the 500 would be cheaper than what I would expect it to be I'd consider my choices. But if it's like one of the joke said here "It would cost me my kidney" I couldn't careless.

MS sells too little hardware to have enough power to threaten HDD suppliers. There are dozens bigger customers for HDD suppliers,  especially several PC manufacturers. Even if MS would switch supplier it would have limited effect for most suppliers. I doubt any big HDD supplier would be ready to take losses instead of MS. Also there aren't that many HDD manufacturers as you may think. There are less than 10 big HDD manufacturers anymore and all others are too small to produce enough HDD's for MS.